Comments on: More thoughts on the fake recovery http://www.creditwritedowns.com/2009/05/more-thoughts-on-the-fake-recovery.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: Edward Harrison http://www.creditwritedowns.com/2009/05/more-thoughts-on-the-fake-recovery.html#comment-57906 Edward Harrison Thu, 31 Dec 2009 16:16:00 +0000 http://www.creditwritedowns.com/2009/05/more-thoughts-on-the-fake-recovery.html#comment-57906 Bruce, I think you may owe me lunch! Recovery has been much better and sooner than expected. Again, this recovery may be fake but it is a recovery nonetheless. Bruce, I think you may owe me lunch! Recovery has been much better and sooner than expected. Again, this recovery may be fake but it is a recovery nonetheless.

]]> By: Ranger Turtle http://www.creditwritedowns.com/2009/05/more-thoughts-on-the-fake-recovery.html#comment-56458 Ranger Turtle Tue, 26 May 2009 13:10:00 +0000 http://www.creditwritedowns.com/2009/05/more-thoughts-on-the-fake-recovery.html#comment-56458 Good article... Like you implied, the habit of seeing bad economic news leads to expecting it, which can put blinders on seeing the changes. Same thing on the flip side in 2006. You seem to keep an open mind about others comments (Roubini, Whitney, readers) and that is appreciated. Good article…
Like you implied, the habit of seeing bad economic news leads to expecting it, which can put blinders on seeing the changes. Same thing on the flip side in 2006.
You seem to keep an open mind about others comments (Roubini, Whitney, readers) and that is appreciated.

]]> By: aitrader http://www.creditwritedowns.com/2009/05/more-thoughts-on-the-fake-recovery.html#comment-56454 aitrader Sat, 23 May 2009 23:42:00 +0000 http://www.creditwritedowns.com/2009/05/more-thoughts-on-the-fake-recovery.html#comment-56454 Seems like a lot of pundits threw fundamental analysis out the window and are positoning themselves on anecdotal evidence alone. The recent rally sparked by a "leaked" Citi memo on mythical Q1 profits is a case in point. No earnings or dividends lead the way. Has "decoupling" hit the markets to such a degree than even earnings are secondary? Shockingly, seems so... Seems like a lot of pundits threw fundamental analysis out the window and are positoning themselves on anecdotal evidence alone. The recent rally sparked by a “leaked” Citi memo on mythical Q1 profits is a case in point. No earnings or dividends lead the way. Has “decoupling” hit the markets to such a degree than even earnings are secondary? Shockingly, seems so…

]]> By: Edward Harrison http://www.creditwritedowns.com/2009/05/more-thoughts-on-the-fake-recovery.html#comment-56450 Edward Harrison Sat, 23 May 2009 14:02:00 +0000 http://www.creditwritedowns.com/2009/05/more-thoughts-on-the-fake-recovery.html#comment-56450 Bob, I really wasn't referring to you specifically. You weren't the only one giving me a working over. The commenters at naked capitalism were particularly unimpressed. As my comment to Bruce Krasting suggests, I am far from certain that we will even see a Q4 recovery. And I am basing my thoughts on the aggregate data from personal income, real earnings growth, retail sales, ism data, unemployment, jobless claims and a host of other economic data which I also report here on this blog. I am not looking at one data series in isolation. I do see recovery as likely but not certain based on the preponderance of evidence. I would sum up my view with this statement from a previous post:<blockquote>I would argue that it is not axiomatic that the structural problems in the U.S. portend a relapse into a deeper contraction. It is just as possible – actually rather likely in my view – that the U.S. economy, at a minimum, will leave recession within the next 6-9 months, if not sooner. For me, the question is two-fold:Are we far enough into an improvement in 2nd derivative data (the change in the change of economic data like housing, jobless claims and GDP) that a reversion to deterioration is unlikely? In plain English, have things have stopped getting worse so quickly for so long that it seems impossible that we could go back to the days when things got worse more quickly?Do we have the wherewithal to conquer the expected future impediments in commercial property writedowns, credit card writedowns, commercial bankruptcies, and unemployment?</blockquote>I say yes to both questions but the likes of David Rosenberg and Meredith Whitney give one ample reason to see the other side of the argument. Bob, I really wasn’t referring to you specifically. You weren’t the only one giving me a working over. The commenters at naked capitalism were particularly unimpressed. As my comment to Bruce Krasting suggests, I am far from certain that we will even see a Q4 recovery. And I am basing my thoughts on the aggregate data from personal income, real earnings growth, retail sales, ism data, unemployment, jobless claims and a host of other economic data which I also report here on this blog. I am not looking at one data series in isolation. I do see recovery as likely but not certain based on the preponderance of evidence. I would sum up my view with this statement from a previous post:
I would argue that it is not axiomatic that the structural problems in the U.S. portend a relapse into a deeper contraction. It is just as possible – actually rather likely in my view – that the U.S. economy, at a minimum, will leave recession within the next 6-9 months, if not sooner. For me, the question is two-fold:Are we far enough into an improvement in 2nd derivative data (the change in the change of economic data like housing, jobless claims and GDP) that a reversion to deterioration is unlikely? In plain English, have things have stopped getting worse so quickly for so long that it seems impossible that we could go back to the days when things got worse more quickly?Do we have the wherewithal to conquer the expected future impediments in commercial property writedowns, credit card writedowns, commercial bankruptcies, and unemployment?

I say yes to both questions but the likes of David Rosenberg and Meredith Whitney give one ample reason to see the other side of the argument.

]]> By: Bob_in_MA http://www.creditwritedowns.com/2009/05/more-thoughts-on-the-fake-recovery.html#comment-56449 Bob_in_MA Sat, 23 May 2009 13:22:00 +0000 http://www.creditwritedowns.com/2009/05/more-thoughts-on-the-fake-recovery.html#comment-56449 I never said you were a wild-eyed bull. I simply felt it was spurious reasoning to latch on a to a single statistic and then interpret it based on its performance in small sample of recessions, none of which were really comparable to this one. Meanwhile, ignoring equally compelling statistics that run counter to your argument. If economic forecasting were that easy, we wouldn't call it the dismal science. Your certainty based on such slim evidence shows a lack of skepticism that usually accompanies false forecasts. I never said you were a wild-eyed bull. I simply felt it was spurious reasoning to latch on a to a single statistic and then interpret it based on its performance in small sample of recessions, none of which were really comparable to this one. Meanwhile, ignoring equally compelling statistics that run counter to your argument.

If economic forecasting were that easy, we wouldn’t call it the dismal science.

Your certainty based on such slim evidence shows a lack of skepticism that usually accompanies false forecasts.

]]> By: Edward Harrison http://www.creditwritedowns.com/2009/05/more-thoughts-on-the-fake-recovery.html#comment-56448 Edward Harrison Sat, 23 May 2009 11:49:00 +0000 http://www.creditwritedowns.com/2009/05/more-thoughts-on-the-fake-recovery.html#comment-56448 Bruce, 100% right. The auto bankruptcies could get us back to 700,000 jobless claims, huge credit card, residential housing and CRE writedowns from the knock-on effects and that would effectively end the chances of recovery. In my jobless claims post two weeks ago I said <blockquote>Nevertheless, I should point out that the idling of workers at bankrupt automakers could balloon these numbers. Some are concerned that idled plants may never re-open, leaving thousands out of work and re-inflating the jobless totals. Despite my contention that the worst is behind us, this possibility is a reminder that we are not out of the woods yet..</blockquote> http://www.creditwritedowns.com/2009/05/jobless-claims-dip-in-most-recent-week.html My baseline is for recovery. But, I wouldn't bet that we see more than 1% growth in Q4. By the way, I have been meaning to write a post reminding people that positive GDP growth doesn't mean recovery. We had one quarter of positive GDP growth in 2008. David Rosenberg, now of Gluskin Sheff, has mentioned that Q2 or Q3 could pop to the upside because of business spending/and or inventories. But that doesn't mean the recession is over. We'll need to see 5 or 6 months of growth before we can give an all clear and since I see a recovery in Q4 or Q1 2010, we won't get the all clear until fall 2010, more than a year from now. Bruce,

100% right. The auto bankruptcies could get us back to 700,000 jobless claims, huge credit card, residential housing and CRE writedowns from the knock-on effects and that would effectively end the chances of recovery. In my jobless claims post two weeks ago I said

Nevertheless, I should point out that the idling of workers at bankrupt automakers could balloon these numbers. Some are concerned that idled plants may never re-open, leaving thousands out of work and re-inflating the jobless totals. Despite my contention that the worst is behind us, this possibility is a reminder that we are not out of the woods yet..

http://www.creditwritedowns.com/2009/05/jobless-claims-dip-in-most-recent-week.html

My baseline is for recovery. But, I wouldn’t bet that we see more than 1% growth in Q4.

By the way, I have been meaning to write a post reminding people that positive GDP growth doesn’t mean recovery. We had one quarter of positive GDP growth in 2008. David Rosenberg, now of Gluskin Sheff, has mentioned that Q2 or Q3 could pop to the upside because of business spending/and or inventories. But that doesn’t mean the recession is over. We’ll need to see 5 or 6 months of growth before we can give an all clear and since I see a recovery in Q4 or Q1 2010, we won’t get the all clear until fall 2010, more than a year from now.

]]> By: Bruce Krasting http://www.creditwritedowns.com/2009/05/more-thoughts-on-the-fake-recovery.html#comment-56447 Bruce Krasting Sat, 23 May 2009 11:38:00 +0000 http://www.creditwritedowns.com/2009/05/more-thoughts-on-the-fake-recovery.html#comment-56447 There is a case that you are all wrong. While I see all of the things that you see, a return to 2% growth by the end of the year is not 'baked in the cake". Take a look at the ten year bond on Friday. 3.41%. Next week Treasury will sell 101 billion in new bonds. The ten year will be at 3.6 by Friday. This puts conforming mortgages at 5.5% and jumbos pushing 7.5%. It also will/has put a lid on the stock market recovery. It is possible that these green shoots you folks are seeing will die this summer, like my lawn. By September/October we could be wonder just what the hell the smart guys were talking about with the recovery. An over/under bet for you. Lunch is the wager. I say 4th quarter GDP will be less than 1% growth. Wanna bet? bk There is a case that you are all wrong. While I see all of the things that you see, a return to 2% growth by the end of the year is not ‘baked in the cake”. Take a look at the ten year bond on Friday. 3.41%. Next week Treasury will sell 101 billion in new bonds. The ten year will be at 3.6 by Friday. This puts conforming mortgages at 5.5% and jumbos pushing 7.5%. It also will/has put a lid on the stock market recovery.

It is possible that these green shoots you folks are seeing will die this summer, like my lawn. By September/October we could be wonder just what the hell the smart guys were talking about with the recovery.

An over/under bet for you. Lunch is the wager. I say 4th quarter GDP will be less than 1% growth. Wanna bet?

bk

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